Penalising payers unfair, says professor

PUBLISHED : Monday, 02 April, 2007, 12:00am
UPDATED : Monday, 02 April, 2007, 12:00am

The State Administration of Taxation's new tax-return filing system targets mainly high-profit sectors including property, energy, tobacco and individuals such as entrepreneurs and celebrities.

Violators face fines of up to 10,000 yuan. But Ma Guoxian , a taxation expert with the Shanghai University of Finance and Economics, said taxpayers deserved better treatment.

'Taxpayers have contributed a lot to China's development. Authorities should not bring up the matter of punishment on a whim. It's easy to stir antipathy,' Professor Ma said.

The mainland's tax revenue soared 21.9 per cent last year to 3.76 trillion yuan as a result of the economic boom and improved tax compliance.

There has been widely reported public discontent over the lack of transparency over the use of tax revenue, attacks on many local governments' spending sprees on perceived white elephants and a failed programme launched in 2001 that required officials to report family assets to prevent corruption.

Professor Ma said that instead of issuing harsh warnings, authorities should do more to update and study taxpayers' information they had already acquired to improve both supervision and services.

Many expatriates have been seeking help from their employers or consulting firms. Zhang Ping , regional partner of Hong Kong-based Dezan Shira & Associates, said dozens of foreign individuals had asked them to file returns.

In the US and Canada, individual tax returns and tax authority explanations resemble thick books but on the mainland they are just two pieces of paper.

Mainland tax returns are also not linked to social security or credit card information, thus bad tax records don't affect other issues such as social security funds, nor will they lead to a blacklisting for bank credit.

Mainlanders did not enjoy deductions for their dependent family members or their own education expenditures as they would in other countries, said Ms Zhang.

'The system lacks force and encouragement. Company employees earning just above the 10,000 mark are among the majority of compliant filers but are they the high-income earners the taxation authorities should be regulating? I doubt it,' Ms Zhang said.

'The really rich can always find ways to evade tax. As the highest individual income tax margin is 45 per cent and corporate income tax is 25 per cent, there is room for company owners to take advantage.'

In big cities like Beijing, Shanghai, Shenzhen and Xiamen , about 60 per cent of individual income tax revenue has come from workers' wages in the past few years, official figures show, suggesting workers account for most tax revenue.

But responding to the working-class discontent, a State Administration of Taxation official told state media last week that a large part of tax came from high-income earners.

'We should not regard the two groups as completely separate. The tax charge reflects a distribution adjustment to a part of high income earners,' he was quoted as saying.

Paying up

Individual income tax, accounting for nearly 7 per cent of tax revenue, rose to 245.2 billion yuan last year, a rise of 17.1%